Analysis

Corporate and withholding taxes

Brexit tax considerations for businesses in Belgium

Brexit may pose issues across various areas for businesses operating in and trading between the UK and the EU. Many of the actions companies take to mitigate Brexit related risks may trigger tax consequences.

Corporate and withholding taxes are a Brexit issue which could have an impact on businesses operating in Belgium.

Business challenges

The UK will no longer be bound by EU Directives (Parent Subsidiary, Interest and Royalty and Merger Directives), EU principles and judgments of the European Court of Justice.

Consequently, profit distributions in the form of dividends and interest and royalties payments between EU entities and the UK could lead to permanent taxation.

Businesses undertaking merger or similar transactions could also be subject to increased tax costs.

Tax focus areas

Review of holding, financing and licensing structures, and anticipating group restructurings

Groups with operations in the UK should review their holding, financing and licensing structures and quantify the potential impact of the loss of the benefit of EU Directives.

Based on such assessment, changes to the holding, financing and/or licensing structures could be considered, for instance to rely on favourable domestic law provisions of some jurisdictions or on Tax Treaties. The potential impact of such changes on the group's operational model should also be taken into account (especially if modifications to licensing structures are envisaged).

Groups envisaging restructuring should also anticipate Brexit to avoid negative tax effects.

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